Compared to the third quarter of 2007, medical oncology services revenue increased $15.3 million, or 3.0 percent and EBITDA increased $3.7 million, or 23.7 percent, both reflecting an increase in daily visits. Also contributing to the medical oncology EBITDA improvement from the third quarter of 2007 was an increase in management fees to reflect a redistribution of amounts retained by an affiliated practice between its medical oncology and cancer center services. These increases were partially offset by a higher management fee reduction under our program to promote continued support of initiatives in our pharmaceutical services segment (as discussed below).
During calendar 2007, medical oncology services revenue increased $7.8 million, or 0.4 percent, while EBITDA decreased $44.7 million, or 35.9 percent. The revenue increase reflects an increase in the average number of daily visits due to the growth in affiliated medical oncologists in the current year. Partially offsetting the revenue growth, and contributing to the EBITDA decline, were reduced utilization of supportive care drugs, reductions to management fees paid by affiliated practices (as discussed below) and the elimination of payments by Medicare to oncologists for providing certain patient care information (the "Medicare Demonstration Project") effective January 1, 2007.
The company's management fees are comprised of reimbursement for
expenses we incur in connection with managing a practice, plus a fee that
is typically a percentage of the affiliated practice's earnings before
income taxes. Our agreements also provide for performance-based reductions
in our percentage-based fee that are designed to encourage disciplined use
of capital and efficient pharmaceutical ordering and management practices.
Certain management agreements have been amended to provide a platform for
long-term financial improvement
|SOURCE US Oncology Holdings, Inc.|
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